Earlier this week MEPs rejected the directive, which was formally tabled six years ago. It now means it would have to be proposed again by the commission, if it were to be resurrected.

ICAEW president, Michael Groom, said the decision would be a set back to the single securities market and EU competitiveness with damaging results for both employment prospects and prosperity.

‘We would urge that the European institutions look again at this issue as a matter of urgency to ensure that Europe has a workable and fair system for regulating takeover bids,’ Groom added.

And his sentiments were echoed by Howard Leigh, chairman of the Corporate Finance Faculty at the ICAEW, said: ‘The rejection of the takeover directive is particularly disappointing from a UK perspective, given that the UK authorities were ready to be very flexible in bringing the necessary changes to the takeover code.’

Earlier, EU internal market Commissioner Fritz Bolkestein claimed the vote was a ‘large step backwards in the realisation of the goals of completing the integration of the European single market and making the EU’s economy the most competitive in the world by 2010.’